Wednesday, 3 January 2007

What next? The Corn Laws?

The Tories are resorting to protectionism again. No surprises there - their free trade credentials were always suspect. In his speech to the Oxford Farming Conference, David Cameron has called for a “buy British” campaign and condemned the government for not measuring how much of the money it spends on food goes towards British produce.

He says that it is "completely wrong" that food "can be imported to Britain, processed here, and subsequently labelled in a way that suggests it's genuinely British". Perhaps, but it creates more wealth to import raw materials and package them here than either to generate the raw materials here or to buy already finished goods. That “value added” is why developed economies are rich and farming societies are not.

Neither is it a "scandal" that the government does not measure how much of its £1.8bn food budget is sourced locally. The most important thing is that the food is of high quality and represents value for money – buying more expensive produce will leave less money for school books, nurses or flak jackets. It would also cost money to draw up this useless statistic.

Rather than pandering to farmers, David Cameron should be promising to dismantle trade protection both at home and in Europe so that we can half the price of the average UK shopping bill and bring wealth to third world farmers. But that would be too much to hope from a party that is more interested in protecting landed interests than boosting the welfare of all.


Tristan said...

I fully agree.

It seems protectionism is the game of the day. Often under the absurd guise of helping the poor (at home and abroad).

I hope the LibDems can make the case for Free Trade (unfortunately many members seem to be seduced by the protectionist arguments)

Governor of N Rhodesia said...

Hi Tom,

I like your piece. Cameron's statements were disappointingly populist.

Don't forget to take into account the effect of taxes on the relative merits of importing finished products and raw materials. I don't know what the laws state in the UK but here in Zambia the tax regime strongly encourages the importation of finished products over raw materials. Raw material imports are taxed more heavily than finished goods making the "value added" packaging/processing tasks that you mention a less attractive option.